Cape Town – Finance Minister Enoch Godongwana has announced that he will reveal details of cost-cutting measures across the state when delivering the Medium Term Budget Policy Statement (MTBPS) in November.
According to IOL, the National Treasury has directed departments to reduce spending due to lower-than-expected revenue collection.
Despite opposition from unions, Godongwana emphasised the need for fiscal sustainability in the medium term.
“Over the medium term, the fiscal strategy aims to achieve fiscal sustainability by reducing the budget deficit and stabilising the debt-to-GDP ratio. Further details on any adjustments or additions to the strategy will be deliberated within government and released in the MTBPS,” the report quoted Godongwana as saying.
ALSO READ | Cosatu, Nehawu oppose Treasury’s cost-cutting measures
He defended austerity measures, citing the worsening economic outlook and the need to accommodate wage increases following the agreement with public sector unions.
The MTBPS will outline strategies for reducing the budget deficit and stabilising the debt-to-GDP ratio, addressing fiscal challenges arising from lower tax revenues and borrowing constraints.
Earlier this month, the Congress of South African Trade Unions (Cosatu) and it’s its affiliate union, the National Education, Health and Allied Workers’ Union (Nehawu), rejected the National Treasury’s cost-cutting measures.
The measures include a freeze on advertising new appointments and procurement contracts for all infrastructure objects. This was outlined in a letter the Treasury sent to national departments, provinces, and public entities, News24 reported.
Both Cosatu and Nehawu raised their concerns over the matter, saying the radical measures will be a blow to departments that are already feeling pressure from previous austerity measures.
The National Education, Health and Allied Workers’ Union [#NEHAWU] is dismayed by the directive on cost containment measures by National Treasury to government departments.@Newzroom405 @TreasuryRSA @PresidencyZA pic.twitter.com/QzzyWMifm5
— @COSATU Today (@_cosatu) September 7, 2023
Cosatu’s parliamentary coordinator, Matthew Parks, described Treasury’s measures as “reckless attempts” to impose misguided austerity budget cuts. He said the proposed solutions will stifle the economy and further weaken government and instead the economy needed stimulus and well-functioning public services.
“What is needed now is to grow the economy. Pick-pocketing nurse and underpaying police officers is not a solution. If we are to grow the economy and reduce unemployment, and thus increase the revenue the state needs to reduce debt, then government needs to deal with the fundamental obstacles suffocating the economy, workers and businesses,” he said.
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Compiled by Betha Madhomu
